South African Retail Sales Growth Slows on Unemployment

June 13 (Bloomberg) -- South African retail sales grew at
the slowest pace in more than two years in April as rising
unemployment and fuel and electricity costs weighed on consumer
spending.

Sales rose 1 percent from a year earlier, down from a
revised 6.7 percent in March, Pretoria-based Statistics South
Africa said on its website today. The median estimate in a
Bloomberg survey of 11 economists was 4.1 percent. Sales rose
1.5 percent in the month. Spending was higher in April 2011
because there were more public holidays last year, the agency
said.

“This is going to put very serious downward pressure on
growth,” Johannes Khosa, an economist at Nedbank Group Ltd.,
said in a telephone interview. “If it continues to weaken, it
will increase pressure” on the Reserve Bank to lower the
benchmark rate.

The central bank has kept the repurchase rate at 5.5
percent for a record 18 months to shore up a recovery from a
recession in 2009 that is under threat from the debt crisis in
Europe. Economic growth slowed to an annualized 2.7 percent in
the first quarter, from 3.2 percent in the previous three
months.

The rand dropped 0.2 percent to 8.413 per dollar at 1:18
p.m. in Johannesburg, erasing gains after the data was released.
The yield on the rand debt due in 2015 dropped six basis points,
or 0.06 percentage point, to 6.19 percent.

Mining Slump

Investors are boosting bets policy makers will cut the
benchmark rate this year. The yield on the forward-rate
agreements due in December declined 6 basis points today to 5.29
percent, the lowest since November.

Growth in retail sales, the fastest expanding part of the
economy last year, slowed in the first quarter. Mining slumped
for a 10th month in April and manufacturing shrunk in March.

The number of people employed in Africa’s largest economy
fell 75,000 to 13.42 million in the first quarter, lifting the
unemployment rate to 25.2 percent, the highest in almost a year.
Inflation was 6.1 percent in April, exceeding the central bank’s
maximum 6 percent target range for the fifth time in six months.